Currently Microsoft owes i4i $300M USD in damages for infringement of its Custom XML patented technology. Microsoft used Custom XML in the best-selling Office 2003 Suite. Microsoft may appeal to the Supreme Court. (Source: Photobucket)

Microsoft is unwilling to pay its big infringement fine

Microsoft has tried and tried to beat Toronto, Canada-based software company i4i in U.S. Federal Court, but has been handed a long string of defeats. In May 2009 it lost a patent infringement case to i4i and was ordered to pay $200M USD in damages. Then in December 2009 it lost its appeal to the U.S. Federal Circuit Court of Appeals, resulting in an increased judgment of $300M USD in damages, including $40M USD tacked on for "willful" infringement.

Now it's lost yet again, as the U.S. Patent and Trademark Office rejected Microsoft plea that the patent used in the case be reexamined. Microsoft is left with two options -- pay the big fine or try to continue its climb up the legal ladder to the only remaining rung -- the U.S. Supreme Court. That may be what it decides to do, its lawyers indicate.

Microsoft's Director of Public Affairs Kevin Kutz responded to the defeat of the USPTO request for reexamination, writing, "We are disappointed, but there still remain important matters of patent law at stake, and we are considering our options to get them addressed, including a petition to the Supreme Court."

I4i has made it clear that it claims no ill intentions towards Microsoft. It claims it merely wants to be rewarded for the Custom XML scheme that cost it millions to develop, which Microsoft liberally borrowed from and used in its best-selling Office 2003 Suite. For the small company a reward would mean it could continue its format development work, while a defeat could spell financial ruin for the business who took a gamble on the massive legal fees required to carry out a litigation campaign against Microsoft.

The company writes in a statement, "i4i’s ‘449 patented invention infuses life into the use of Extensible Mark Up Language (XML) and dramatically enhances the ability to structure what was previously unstructured data. As the magnitude of data grows exponentially, this is a critical technological bridge to controlling and managing this sprawling octopus of data and converting it into useful information."

This core element of the case -- Custom XML -- is a scheme for storing and displaying rich information. Microsoft used Custom XML in Office 2003, but did not pay i4i licensing fees, according to the plaintiff's claims. Microsoft disputes this, but has since removed Custom XML from its Office products via a patch to escape a court order forcing it to cease sales. The Office 2010 beta/RTM builds notably do not use Custom XML, as well. Custom XML should not be confused with the similarly named Open XML, which is unrelated to the case.

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